Five Business Tips to Improve Your Amazon Sales

By: Skip McGrath

#1 - Change your account to use Fulfillment by Amazon (FBA)

I have been selling on Amazon since 2006 and eBay since 1999. Before Amazon
came along, eBay was responsible for about 80% of my sales and I only sold about
20% on Amazon. Today we are now 80% Amazon and only 20% eBay.

Back then, we were Merchant Fulfilling (MF) which means every time something
sold, we had to ship to our Amazon customer. In 2010 we converted to FBA. And,
by 2011 we were 100% FBA.

FBA is a service Amazon provides where you send your merchandise to Amazon, and
when an item sells, Amazon collects the money from the customer, takes the
credit card risk, and ships the item to the customer. Amazon also handles
returns and customer service issues.

About four months after we completed the conversion to FBA our Amazon
sales increased by almost 800%.

#2 - Maintain Excellent Account Metrics

Amazon looks at all of your account activities to see how well you are doing.
These include:

Buyer/Seller contact metrics. Amazon requires you to answer buyer emails
within 24 hours, and they count those that take longer as negatives

Keeping your metrics within Standard norms are critical!

If your metrics get too bad, Amazon will suspend or cancel your account. Also
–this is important to your overall sales because, Amazon uses these metrics as a
major factor, when they determine who wins the buy box.

Price is still the biggest factor when Amazon determines who wins the buy box,
but if your metrics are poor, you can lose the buy box even if you are the
lowest price seller.

#3 - Increase Your Inventory

The more items you have listed (and in stock), the more you will sell every
day. I am always amazed to see sellers who have been selling on Amazon for more
than a year or two, who have less than 100 to 150 listing SKUs. (SKU stands for
Stock Keeping Unit. A SKU is a number you make up to keep track of your
products. Each separate item you list on Amazon requires a SKU. If you don’t
assign one –Amazon will assign a random one.)

My wife and I used to have over 900 SKUs (different items listed). At that
level, our daily sales were approximately 55 items per day.

We're getting older and wanted to slow down, so we decided to scale our
business back. Now we are down to about 500 SKUs, and that translates to about
25 to 30 items per day. As you can see, there is a direct correlation between
the number of active SKUs and your daily sales.

Keep investing your profits in finding more items to sell. Watch your
inventory levels to make sure you replenish items when you start to get low.

#4 - Reduce Your Non-Performing Inventory (NPI)

NPI is inventory that sells either slowly or not at all. Keeping this
inventory in stock hurts you in two ways.

First is your opportunity cost. You have money tied up in stock that
could be used to buy stock that is selling steadily.

Secondly, if you are using FBA then you are paying Amazon
monthly storage fees on items that are not selling –and perhaps even
long-term storage fees twice a year.

The fastest way to reduce NPI is to lower your price. But sometimes,
even that doesn’t work. When this happens, I remove the listing and the
inventory from Amazon. Then, I donate the inventory to my local thrift shop for
a tax deduction.

#5 - Raise Your Average Selling Price (ASP)

If you sell 50 items a day and make $1.50 on each one, then you are making
$525 a week or $2,100 per month. But, if you make an average of $5 on each item,
now you are talking about some serious money ($1,750 per week or $7,000 per
month).

The key lesson here is: don’t source products that will sell for under $25. My
personal goal is $30 and currently we are near that at $33.75.

If you are selling in FBA, look at these two images below. This is a shot of the
Amazon FBA Revenue calculator.

Both of these are products I sell. Your net from Amazon (the last line) on an
item that sells for $12.95 where your product cost was $6.50 (including inbound
shipping and shipping to Amazon). Since your net from Amazon is $7.94 – less
your product cost, your profit was $1.44. ($794 – 6.50 = $1.44). The deductions
you see are Amazon selling and FBA fees.

The second item is an item I sell where my product cost is $17.50 (again
including inbound shipping and shipping to Amazon). I sell that item for $49.95
and my net is $38.40. So less my product cost of $17.50, my profit is $20.90.

Which one would you rather sell more of?

Don’t get me wrong, I do have a few low price selling items. My
$12.95 item is a garlic crusher/slicer. I sell about 25 of those per
week.

The second item is a concealed carry pistol holster, which only
sells about two per week. But, if you do the math, I make almost as
much weekly profit on those two holsters, as I do on the faster
selling garlic slicer.

So, there are 5 great tips to help build your business. If all you
do is read them –you won’t see much difference. But, if you put the
steps and techniques in place, you will see results quite soon.

The Complete Amazon Marketing System is a two-volume printed training manual over 350 pages long. It also comes with several training videos, over a dozen free bonuses and free lifetime membership in my Wholesale Sourcing Members Site.

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